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Supermarket apple prices surpass three-year highs

BELDING, Mich. — Supermarket apple prices have climbed to the highest levels in nearly three years, and retailers are bracing for further increases, even with Michigan growers expected to harvest one of their largest crops in the past two decades.

Apple supplies have tightened because of a smaller crop from Washington, the top U.S. apple grower. That’s pushing up costs for supermarket chains such as Strack & Van Til, which operates 16 stores, mostly in northwest Indiana. Washington’s pain will be Michigan’s gain, said Rick Wise, director of produce.

Michigan growers “are going to take advantage of the market,” Wise said. “Prices are going to start out high.”

Wise said prices he’s paying for 3-pound bags of paula red apples, for example, were already up 65-70 cents, or 30%, compared with levels a year ago.

Nationwide, red delicious apples averaged $1.37 a pound at retail during July, up 6.2% from $1.29 the same month in 2010, according to U.S. Bureau of Labor Statistics data. That’s the highest monthly price, not adjusted for inflation, since $1.42 in October 2008.

As apple supplies tightened, prices rose faster than for many other produce items, contributing to a broader acceleration in food inflation that’s pushing Americans’ grocery bills higher. For the full year, fresh produce inflation is on pace to rise 3.5% to 4.5%, the largest annual increase since 2008, according to a recent U.S. Department of Agriculture forecast. Prices rose 0.6% last year after falling 4.6% in 2009.

Tighter apple supplies partly reflect a cold, wet spring that curbed production in key growing regions. Washington’s apple harvest was projected at 5.4 billion pounds, down 2.7% from 2010, according to the U.S. Department of Agriculture. New York’s crop is expected to decline 1.6%.

“The weather has been the biggest culprit at this point, with an assist from energy-based inputs and transportation costs,” said USDA economist Gary Lucier.

“All these products also have to be transported to market, and with high petroleum costs that has added to retail prices.”

Acontinuing food price escalation raise questions whether consumers, pressed by high unemployment and expensive gasoline, will cut back on some items, analysts have said.

Wise said he is mostly absorbing rising produce costs rather than passing higher prices along to his store aisles.